The appropriate discount rate for both project

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Reference no: EM131339721

Allied, Inc. is considering Project A and Project B, which are two mutually exclusive. Project A is an eight-year project that has an initial outlay or cost of $180,000. Its future cash inflows for years 1 through 8 are $38,000. Project B is also an eight year project that has an initial outlay or cost of $160,000. Its future cash inflows for years 1 through 8 are the same at $34,500. The appropriate discount rate for both project is 7.5%. Which project should Allied accept? a. Project A because it has a higher NPV b. Project B because it has a higher IRR c. Both projects should be accepted d. Neither project should be accepted e. Not enough information to solve this problem.

Reference no: EM131339721

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